A Forrester Research report released Tuesday says that the
true threat to record labels' profits is the sagging
economy, and that downloadable music could actually prove to
be the industry's salvation rather than its scourge.
According to the report's findings, people who download
music from the Internet more than nine times a month -- a
relatively small percentage of the overall market -- say
they'll decrease their album purchases by 2%. At the same
time, 39% of downloading enthusiasts said they bought more
CDs, because they found new music that they wanted to
purchase through their file-swapping activities. Meanwhile,
it turns out that consumers who rarely or never download
music account for more than two-thirds of CD sales in the
U.S. With music sales slumping nearly 10% this year so far,
report author Josh Bernoff says the true culprits are
limited radio playlists, high-priced CDs and a general
economic recession. The Forrester report suggests that
record labels should offer more flexible pricing and online
access to their entire music back-catalogues in order to
make online music-buying more consumer-friendly. The
predicted payoff (which some view as excessively optimistic)
could amount to a boost of $937 million in album downloads,
$805 million in singles downloads and $313 million in
subscription fees by 2007. (Los Angeles Times 14 Aug 2002)